powerpoint presentation · •we resolved the altius lease to further reduce ongoing operating...

• I am extremely proud of the way our Shell Employees’ Credit Union has responded to the challenges that faced us this past year.

• Together we have made some tough decisions to provide the best value to our members and to ensure our credit union is well positioned for the future.

Taking Control of Normal Operating Costs

Delivering Higher Returns

Dealing With Tough Situations

• We resolved the Altius lease to further reduce ongoing operating costs

• We supported Fort McMurray members with a donation and special loan program

– Donation of $ 5,987 to Red Cross relief efforts

– 3 month interest-free loan program issued 24 loans totaling $ 725,000

Providing Value to Members

• Focused loan and deposit drives

• Proactive member engagements

• New mobile banking capabilities

– being rolled out in 2017

• Participation in system collaboration initiatives

– Objective is to lower costs and improve efficiency

• Reorganized to improve marketing skills, member service and regulatory compliance

• Continued expansion of Wealth Management

• Member Assets increased by 1.0%

• Member Deposits increased by 0.7%

• Loans decreased by 0.2%

• Membership decreased by 0.2%

Growth Summary

•

•

What’s the Bottom Line?

•

•

•

•

Thank You!

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

(Excluding unusual and unbudgeted significant costs)

(After unusual and unbudgeted significant costs)

2012 2013 2014 2015 2016

Dollar Value $216,928 $213,989 $208,369 $161,154 $180,046

Dividend Rate 5.00% 4.00% 4.00% 3.00% 3.25%

-1.0%

1.0%

3.0%

5.0%

$0

$50,000

$100,000

$150,000

$200,000

$250,000

Dividends Paid

2011 2012 2013 2014 2015 20162011-2015Average

Net Writeoffs $18.36 -$14.48 $29.53 $97.88 -$10.72 $205.82 $24.11

-$50.00

$0.00

$50.00

$100.00

$150.00

$200.00

$250.00

Writeoffs - Net of Recoveries (Thousands)

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CONFIDENTIAL

SHELL EMPLOYEES’ CREDIT

UNION LIMITED

Financial Statements

October 31, 2016

Presented on: March 8, 2017

Presented by: Douglas G. Kroetsch, CPA, CA

CONFIDENTIAL

To the Members of Shell Employees’ Credit Union Limited

We have audited the accompanying financial statements of Shell Employees’ Credit Union Limited, which comprise the statement of financial position as at October 31,

2016 and the statements of income and comprehensive income, changes in members’ equity and cash flows for the year ended October 31, 2016, and a summary of

significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for

such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to

fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted

auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the

financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the

auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk

assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes

evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall

presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of Shell Employees’ Credit Union Limited as at October 31, 2016 and its

financial performance and its cash flows for the year ended October 31, 2016 in accordance with International Financial Reporting Standards.

Edmonton, Alberta

January 25, 2017 Chartered Professional Accountants

33

AUDITORS’ REPORT

CONFIDENTIAL

October 31, 2016 October 31, 2015 Percentage

Change

Assets

Cash and cash equivalents $ 1,226,163 $ 872,147 40.6%

Investments 48,694,995 45,790,460 6.3%

Loans to members 221,513,877 222,017,299 (0.2)%

Derivative financial assets 151,100 98,167 53.9%

Other assets 363,741 286,171 27.1%

Income taxes receivable --- 103,585 ---

Deferred income taxes 143,159 --- ---

Property and equipment 549,259 666,367 (17.6)%

Intangible assets 169,262 174,181 (2.8)%

$ 272,811,556 $ 270,008,377 1.0%

34

SHELL EMPLOYEES’ CREDIT UNION SHELL EMPLOYEES’ CREDIT UNION LIMITED

Statement of Financial Position

October 31, 2016

CONFIDENTIAL


Change

Liabilities

Member deposits $ 255,725,311 $ 253,880,857 0.7%

Accounts payable and accrued

liabilities

893,011 291,575 206.3%

Derivative financial liabilities 151,100 98,167 53.9%

Income taxes payable 42,358 --- ---

Deferred income tax liability --- 19,889 ---

$ 256,811,780 $ 254,290,488 1.0%

35



October 31, 2016

CONFIDENTIAL


Change

Members’ Equity

Dividends distributable $ 180,046 $ 161,154 11.7%

Common shares 5,664,849 5,474,481 3.5%

Retained earnings 10,154,881 10,082,254 0.7%

$ 15,999,776 $ 15,717,889 1.8%

36



October 31, 2016

CONFIDENTIAL

2016 2015 Percentage Change

Financial Income

Interest on member loans $ 7,215,352 $ 7,434,845 (3.0)%

Investment 878,787 824,447 6.6%

8,094,139 8,259,292 (2.0)%

Financial Expenses

Interest on member deposits 4,011,827 4,547,433 (11.8)%

Interest on borrowings 17,154 33,522 (48.8)%

4,028,981 4,580,955 (12.0)%

Financial margin before provision for loan impairment 4,065,158 3,678,337 10.5%

Provision for loan impairment 261,552 55,881 368.1%

Financial Margin 3,803,606 3,622,456 5.0%

Other income 568,407 544,414 4.4%

Net operating income 4,372,013 4,166,870 4.9%

Operating expenses 4,107,544 3,613,148 13.7%

Income before income taxes 264,469 553,722 (52.2)%

Income tax expense 58,968 68,981 (14.5)%

$ 205,501 $ 484,741 (57.6)%

37


Statement on Income and Comprehensive Income

For the Year Ended October 31, 2016

CONFIDENTIAL

2016 2015 Percentage

Change

Personnel $ 1,785,362 $ 1,806,565 (1.2)%

Security 432,206 432,618 (0.1)%

Organizational 102,761 114,846 (10.5)%

Occupancy 983,531 490,680 100.4%

General business 803,684 768,439 4.6%

$ 4,107,544 $ 3,613,148 13.7%

38


Schedule of Operating Expenses

For the Year Ended October 31, 2016

CONFIDENTIAL

6. Investments

Credit Union Central of Alberta Ltd.

October 31, 2016 October 31, 2015

Shares $ 2,942,010 $ 2,942,010

Term deposits 22,800,000 27,000,000

Mortgage pools 4,832,248 4,479,937

Term deposits 17,890,000 11,200,000

Accrued interest 230,737 168,513

$ 48,694,995 $ 45,790,460

39


Notes to the Financial Statements

October 31, 2016

CONFIDENTIAL

8. Loans to members

2016 2015

Gross Amount Allowance Net Carrying

Value

Net Carrying

Value

Consumer $ 14,569,217 $ 162,561 $ 14,406,656 $ 14,155,343

Residential

mortgages

165,035,699 30,154 165,005,545 170,000,280

Commercial 10,328,088 --- 10,328,088 5,030,776

Line of credit 31,541,674 --- 31,541,674 32,656,471

$ 221,474,678 $ 192,715 $ 221,281,963 $ 221,842,870

Accrued interest 231,914 --- 231,914 174,429

$ 221,706,592 $ 192,715 $ 221,513,877 $ 222,017,299

40



October 31, 2016

CONFIDENTIAL

8. Loans to members (Continued)


Balance, beginning of year $ 135,929 $ 69,330

Charge for loan impairment 261,552 55,881

397,481 125,211

Accounts written off (204,766) 10,718

Balance, end of year $ 192,715 $ 135,929

41



October 31, 2016

CONFIDENTIAL

13. Member deposits


Demand $ 53,035,766 $ 56,741,361

Term 121,297,625 115,915,099

Registered Retirement Savings Plan 46,724,838 48,134,348

Registered Retirement Income Fund 20,069,938 19,300,270

Tax-Free Savings Account 9,422,692 8,455,142

Registered Educational Savings Plan 3,292,388 3,414,294

253,843,247 251,960,514

Accrued Interest 1,882,064 1,920,343

$ 255,725,311 $ 253,880,857

42



October 31, 2016

CONFIDENTIAL

This report is confidential and is intended solely for the use of the Audit Committee in discharging its responsibilities with

respect to the financial statements, and should not be used for any other purposes. No responsibility for loss or damages, if

any, to any third party is accepted as this report has not been prepared for, and is not intended for, any other purposes. This

report is a by-product of the audit and is therefore a derivative communication, and would not necessarily identify all matters

that may be of interest to the Audit Committee in fulfilling its responsibilities. This report should not be distributed to others

outside the Credit Union without our prior written consent.

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